Pottstown council dickers over tax abatement deal

POTTSTOWN — Several borough council members Wednesday picked at a proposed tax relief deal floated to bring a new business to town, saying the borough is giving too much away.

The discussion centers around the former 84 Lumber truss assembly plant at 451 Keystone Blvd., which a Conshohocken business wants to buy for a hearse and limousine company that would bring half a dozen jobs to the borough.

The site is located in Pottstown’s mostly moribund Keystone Opportunity Zone, which would allow for a property tax abatement on the property, with the agreement of council and the school board.

After knocking the subject around at the joint meeting between borough council and the school board on Feb. 26, Borough Manager Mark Flanders and Schools Superintendent Jeff Sparagana were tasked with negotiating with Jay Lankford of Heritage Coach Co. Inc. to iron out a deal all sides could agree on.

Advertisement

At the joint meeting, in response to school district concerns about loss of tax revenue, Council Vice President Jeff Chomnuk proposed an agreement in which the business slowly escalated its tax payments over the course of the seven-to-10-year abatement.

Wednesday night, Flanders outlined for council the agreement he and Sparagana had reached with Lankford, which includes an agreement to provide storage space for the school district during its elementary construction project, as well as an offer of internships to give students real-life business experience.

Under the terms, the tax abatement would last for 10 years, with no property taxes being paid to the borough, the school district or the county for the first three years.

In the fourth year, 25 percent of the total tax bill with be paid with a 10 percent increment increase in each subsequent year.

At the end of the 10 year period, the borough would receive $41,903 in property taxes out of the potential earnings of more than $108,000 without the abatement, said Flanders.

All these estimates presume the borough does not raise taxes for the next 10 years, and excludes the revenues the borough would enjoy from both the property transfer tax and earned income taxes from people employed at the site. Estimates of those revenues were not immediately available Thursday afternoon.

“I don’t know how we can afford it,” Councilman Dan Weand said of the deal Flanders laid before council.

Weand is the chairman of council’s finance committee and one of the council members who voted to spend $30,000 not in the 2013 budget for a review of the codes office. The rationale Weand offered for spending un-budgeted money on that study was that it would help to make Pottstown “more business friendly.”

“Ten years is a long time and if they pull out, the borough won’t make that money back,” said Weand. “I feel like the borough is taking too great a risk.”

Councilman Travis Gery, who said he favors bringing the business to borough, asked if Heritage might agree to a clause in the agreement whereby the company pledges to pay 100 percent of whatever tax bill it would have accumulated should it leave Pottstown before the 10 years are up.

“That gives them an incentive to stay,” Gery reasoned.

Still another suggestion came from Councilman Joe Kirkland, who said he believes three years is too long to allow the property to skip property tax payments, and also said he thought in the third year, the initial tax payment should be more than 25 percent.

“You don’t start a negotiation with your best offer,” Kirkland said.

Flanders replied that in face he and Sparagana had begun their discussions with Lankford with an proposal very much like Kirkland had suggested and ended up with the proposal he brought to council.

Chomnuk and Council President Stephen Toroney both strongly warned against asking too much from a business interested in coming to Pottstown.

Toroney reminded council that Lankford “is making a $1.5 million investment to upgrade and renovate that building” in addition to the purchase price.

Flanders also pointed out that because Lankford has had to ask for two extensions now on his agreement of sale for the property while he awaits a decision from the school board and borough council, “he has sunk a lot of his personal money into

“This is a family business that has been around for 22 years and they are in it for the long haul,” Toroney said.

“I assume 84 Lumber was in it for the long haul too,” Gery replied.

The 84 Lumber plant, which opened in 2003, was the trigger for the county grants that helped to get Keystone Boulevard open and fitted with water and sewer lines, Toroney said.

And on March 13, council will meet with the West Pottsgrove Township Commissioners on the subject of extending the road to Grosstown Road, and thus build a direct connection to Route 422, as has been envisioned for years.

Chomunk served on the study committee that looked at making that happen, and he said having a viable business there would help to attract more and to make the extension project more likely to happen.

Flanders said he would take the various responses from the council members back to Lankford and bring a final proposal to council for a vote at Monday’s meeting.

Should council approve the deal, it would then be up to the school board, which stands to lose substantially more tax revenue from the arrangement than the borough. The Montgomery County Commissioners have said they will follow whatever lead the two local governments take.

All three must agree to the arrangement before the application to extend the Keystone Opportunity Zone benefits can be made to the state.

About the Author

Evan Brandt has worked for The Mercury since November 1997. His beat includes Pottstown, the surrounding townships and the Pottstown and Pottsgrove school districts, as well as other varied general topics like politics, the environment and education. Reach the author at ebrandt@pottsmerc.com
or follow Evan on Twitter: @PottstownNews.